Written evidence submitted by the National Pig Association (NPA) (FS0047)

September 2022

NPA response to the Environment, Food and Rural Affairs Select Committee call for evidence:

“Food Security”

The National Pig Association (NPA) is the representative trade association for British commercial pig producers, is affiliated to the National Farmers Union (NFU) and represents the interests of NFU members that produce pigs and the pig industry interests of its Allied Industry members.

The UK pig industry is worth £1.6 billion at the farm-gate, £5 billion at retail and, considering foodservice, external sales and export values, over £14 billion in total. In 2020, over 400,000 tonnes of British pork was exported around the globe, to over 40 export markets, a trade worth £655 million.

1. What are the key factors affecting the resilience of food supply chains and causing disruption and rising food prices – including input costs, labour shortages and global events? What are the consequences for UK businesses and consumers?

The UK pig industry has endured an unprecedented crisis over the last two years as a result of labour shortages and COVID disruption in processing plants that led to huge backlogs of contracted pigs on farms and the needless culling of tens of thousands of healthy animals. This was before Russia’s invasion of Ukraine, which has resulted in additional input cost increases pushing farmers from a very challenging financial situation to a critical one.

Since October 2020, pig farmers across the UK have lost money for eight consecutive quarters and have collectively lost more than £600 million. More than 60,000 healthy animals have been culled on farms due to the above supply chain issues. Since January 2022 they have been losing in excess of £50 per pig (see graph below) and are enduring crippling financial hardship.

(Source: AHDB)

Producers have not faced such volatility in the market for over 20 years and, if this is not addressed, continuing to produce pork will not be viable for many farmers. We have already seen a contraction of the UK breeding pig herd of 17% (Defra census) and more producers are making the decision to leave pig production or reduce their herd size. The supply chain is complex but cuts of British pork typically enter the retail supply chain in this country so ultimatly a reduction in the national pig herd will equate to less British pork on shelf. In summary, the consequences for UK businesses and consumers are as follows:

• Less British pork
• Higher prices
• More imported food
• Fewer British jobs
• Less tax for the Treasury
• Reduction in domestic food security

2. What is the outlook for UK food price inflation in the short and medium term? What policy interventions should the Government consider to manage these pressures?

The Standard Pig Price (SPP) stands at 200p/kg, which is a record high. However, the Agriculture and Horticulture Development Board (AHDB) estimate that average current cost of production is approximately 223p/kg so there is still a significant gap that needs to be bridged. Some retailers have introduced the cost of production into contracts as an element of the price in order to protect their primary producers but others are still paying too little to make production viable. As more farmers leave the industry, supply will continue to tighten (see Q3) and this will add to the inflationary pressures.

The biggest short-term driver of inflation in the sector has been feed costs. Historically, they have made up 60-65% of the farmgate cost of producing a kilogram of pork meat. Since December 2021, feed costs have risen to 71-74% of the full economic cost of production.

Energy costs are another major factor, particularly for the indoor sector, although the recent Government measures to cap prices for businesses are welcome. Energy price inflation has been the final nail in the coffin for some producers but this new scheme will hopefully ease the financial pressures on others who have survived up to this point. Some are exploring alternatives but such changes are not easy or quick to make, and with financial investment often required many are not in a position to even consider.

As the cost of producing a pig increases, this should be reflected in the price paid to the producer and subsequently recouped by the retailer in store. Therefore, in the short to medium-term, the cost of British pork to the consumer may increase. It has already risen slightly but is still very competitively priced in comparison to other proteins. Sadly, the disparity in price between cheaper imported EU and UK pork is currently still significant enough to be attractive to both retailers and shoppers, who are obviously more price conscious than ever. Both retailers and consumers need to continue to support British pork whenever they can to ensure the sector is supported and can survive. We also encourage retailers to help balance the carcase better using cuts not sold as fresh pork within their supply chain as ingredients – one retailer does this very well and others try but this is limited.

3. How are the rising cost of living and increasing food prices affecting access to healthy and nutritious food?

As noted in the response to Q1, Defra’s June 2022 census showed that the sow herd in England has contracted by 17% year-on-year and is now at its lowest number for 20 years. The NPA is aware of more businesses leaving the sector since June and we could see up to a quarter of the domestic pig industry lost before producers return to profitability.

(Source: Defra)

The result of this contraction is less British pig meat available, fewer jobs and a reduction in overall food security. This loss of domestic production will be replaced by imported meat, often produced in systems with lower welfare and environmental standards.

Another consequence of this reduction in production is how it affects the viability of the processing industry in the UK. One of biggest fragilities in the pig supply chain comes from UK farmers being so heavily reliant on four major processing companies, operating a small number of large abbatoirs. Appproximately 90% of UK production is slaughtered and processed by these companies. With such a large contraction in the sow herd, it may make some existing plants unviable and further reduce the number of available abattoirs. This leaves producers more vulnerable to problems in the processing sector, whether it be breakdowns, labour shortages or any other interruption to business as usual.

Wider than the processing sector, the contraction of the pig herd also affects allied industries such as feed, pharmaceuticals, genetics and building and materials companies.

Rising food costs will also lead to changes in buying behaviour. Retailers are already reporting increased demand for pork mince and shoulder meat, which is more affordable than other cuts. Consumers will also chose to substitute one protein for another which, because pork is usually less expensive than other meats, may mean that demand for pork is less heavily impacted than beef or lamb for example.

4. How will the proposals in the Government’s food strategy policy paper affect:
1. the resilience of food supply chains?;
2. the agri-food and seafood sectors?;
3. access to healthy, nutritious food?

The events of the last two years have clearly highlighted the fragility of the pig supply chain in the UK. It was the primary producers who were most severely impacted by problems that originated in the processing sector and the ultimate consequence of that has been a significant contraction in the sow herd. Defra has recognised this and launched a review into Contractual Practice in the UK Pig Sector.

We hope that the outcome of this review will create a framework for a more resilient supply chain, ensuring that the industry is better protected and that risk is more proportionately distributed throughout the supply chain, not just borne by the primary producer. Other stakeholders, such as retailers must commit to supporting their supply base as bad behaviour often starts at the top and cascades down the chain to the producer at the bottom. Building fair and resilient supply chains is crucial to domestic food security and therefore our ability to access healthy, nutritious food.

It is essential for consumers, especially in the current financial climate, to retain access to healthy, nutritious food. The British pig sector operates a variety of different high welfare production systems offering numerous options from Red Tractor assured to organic, delivering price points dependent on shoppers financial constraints or lifestyle/ethical purchasing decisions. We must be cognisant that welfare standards in this country are some of the highest globally, and rapidly and disproportionately increasing farm standards will increase the cost to the consumer, with many being unable to afford to purchase essentials pork-based products.

5. Is the current level and target of food self-sufficiency in England still appropriate?

The UK is approximately 58% self-sufficient in pig meat, which is lower than other proteins such as lamb (109%), beef (86%) and poultry (65%). It is important to note that trade plays a key role in carcase balance for the pig industry and, therefore, it is more complex than simply saying we produce 58% of what we eat. UK consumers prefer cuts from the leg and loin, and there are simply not enough pigs in the UK to satisfy that demand. We export less popular cuts, such as belly pork and offal, in order to maximise the value from each animal. The table below demonstrates this:

The domestic sow herd has halved in number since the 1990s following a series of shocks at the turn of the century: sow stalls were unilaterally banned in 1999 followed by the Classical swine fever and Foot & Mouth Disease outbreaks of 2000 and 2001. As a result, we are now considerably less self-sufficient.

Therefore, there is an opportunity for the UK to become more self-sufficient in pig meat again if demand can be sustainably increased and the right market conditions return to make the industry more viable. New growth could come through more public procurement and increased food service sales of British produce. Currently nearly all pork consumed through those avenues is imported but changes to the way in which they operate, such as domestically focused procurement rules and country of origin labelling in hospitality settings, could encourage the sector to expand. Retailers also have an important role to play in supporting UK produce and there are examples such as Co-op, Lidl, Marks & Spencer and Waitrose where they are committed to domestic supply by only selling fresh British pork, and in some instances buy the entire carcase, balancing the cuts internally by using it for sandwich fillings, pizza toppings, pork pies etc.

6. How could the Government’s proposed land use strategy for England improve food security? What balance should be stuck between land use for food production and other goals – such as environmental benefit?

We support the Government’s aim “to target land-use change at the least productive land”. There is limited suitable land for outdoor pig production in the UK and it is generally part of an important arable rotation system. We therefore support proposals to keep this productive land in its current use and note that continued expansion in the outdoor sector is challenging because of the available land.

The indoor sector would benefit from a more supportive planning system, which recognises the importance of food production. Natural England’s pursuit of “nutrient neutrality” has prevented reinvestment and new construction in certain regions which means older buildings cannot be replaced and new farms cannot be built. Because Natural England do not recognise ‘betterment’; new buildings with much improved environmental standards are refused despite being more environmentally sympathetic, perpetuating this a perverse logic to preventing modernisation.

It is also important to acknowledge the key role indoor farming plays in domestic food security. 60% of pig farming in the UK is indoors and it is a very efficient use of land for food production. Furthermore, it has environmental benefits because waste can be captured, preventing pollution, and re-used as fertiliser. Outdoor pigs are often included as part of a crop rotation to improve soil health; they provide a break crop after vegetables such as potatoes, specifically helping to reduce volunteers and subsequently pest burden such as potato cyst nematode, whilst improving nutrient and soil organic matter content.

Indoor pig businesses often enter into muck for straw agreements which not only helps soil fertility but means less artificial fertiliser is used. The value of slurry in improving soil health (via the provision of trace elements and supporting soil bacteria) should also be highlighted.

Indoor pig farms’ impact on water quality is already tightly controlled with many farmers either regulated through an environmental permit, the Nitrates Directive or committed to best practice, now via the new Farming Rules for Water. Many are also engaged with Catchment Sensitive Farming and Red Tractor farm assurance, which represents 95% of all pigs produced, providing regular audits against regulations.

When considering air quality and ammonia in particular; indoor environmentally controlled pig buildings are able to deliver reduced losses, not only through diet formulation, but also ventilation, including scrubbers and bio filters, slurry cooling and/or acidification, slurry storage and manure spreading techniques. Furthermore, some are environmentally permitted and have to apply production systems which are proven to reduce emissions of ammonia to the atmosphere. The challenge of improving air quality and mitigating climate change is actually best met by modern indoor environmentally controlled buildings, good practice and advances in efficiency and technology.

The British pig industry has always been and remains committed to improving environmental efficiency and mitigating climate change. To do this we must improve our productivity and continue to control and reduce where ever possible our emissions. One of the key barriers to improving productivity and health and welfare on farms lies with continued use of old animal housing for modern methods of husbandry and animal genetics. Newer buildings are far more environmentally efficient, requiring less energy, whilst creating fewer ammonia or odour emissions. 

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Contact:              Charlie Dewhirst, Senior Policy Advisor